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Glossary

Of terms used in a grant application

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501(c)(3): Section of the Internal Revenue Code that designates an organization as charitable and tax-exempt.

509(a): Section of the tax code that defines public charities (as opposed to private foundations). A 501(c)(3) organization must also have a 509(a) designation to further define the agency as a public charity.

Application: May also be called a request, proposal or letter of inquiry (LOI) which is sent to a foundation when a non-profit organization is requesting consideration for grant funds. A pre-application is the equivalent of an LOI at The Ford Family Foundation.

Assistance Grants: Operational or management assistance given to a non-profit organization. It can include fundraising assistance, budgeting and financial planning, program planning, legal advice, marketing and other aids to management. Assistance may be offered directly by a foundation or in the form of a grant to pay for the services of an outside consultant.

Capital Campaign: An organized drive to collect and accumulate substantial funds to finance major needs of an organization such as a building or major repair project.

Challenge Grant: A grant that is made on the condition that other monies must be secured, either on a matching basis or via some other formula, usually within a specific period of time, with the objective of stimulating giving from additional sources.

Decline: Also referred to as Denial, a decline is the refusal or rejection of a grant request. It does not mean necessarily that the proposal is a bad idea, but more often is related to readiness, timing, size or fit with foundation goals.

Endowment: The principal amount of gifts and bequests that are accepted subject to a requirement that the principal be maintained intact and invested to create a source of income for a foundation. A non-profit may build an endowment to create an investment revenue stream. Many private foundations approve of such plans but may not contribute to them.

Evaluation: A review of the results of a grant, with the emphasis upon whether the grant achieved its desired objective.

Evidence-based Best Practices: Standard, published operating methods found to produce the best performance and results in a given industry or organization.

Extension: Sometimes a grantee is unable to complete the project or program for which it has received grant funds. In this situation, the organization should contact the foundation and request an extension to the grant period in order to allow additional time to complete the project or program.

Final Report: A foundation will often require a grantee to provide a final report once the grant period is completed. Generally, a narrative report and financial accounting report is provided to the funder. The content of the narrative will vary depending on the foundation and type of grant.

Financial Report: An accounting statement detailing financial data, including income from all sources, expenses, assets and liabilities. A financial report may also be an itemized accounting that shows how all grant funds were used by a grantee organization.

Form 990: The IRS form filed annually by public charities. The IRS uses this form to assess compliance with the Internal Revenue Code. A private foundation files a 990 PF.

Grant: An award of funds to an organization or individual to undertake charitable activities. Most foundations only make grants to 509(a) charities.

Grantee: The individual or organization that receives a grant.

Grantor: The individual or organization that makes a grant.

Grassroots Fundraising: Efforts to raise money from individuals or groups from the local community on a broad basis. Usually an organization does grassroots fundraising within its own constituency – people who live in the neighborhood served or clients of the agency’s services. Grassroots fundraising activities include membership drives, golf tournaments, raffles, bake sales, auctions, dances, and a range of other activities. Foundations often feel that successful grassroots fundraising indicates that an organization has substantial community support.

Guidelines: A statement of a foundation’s goals, priorities, criteria, and procedures for applying for a grant.

In-kind Contribution: A donation of goods or services other than cash or appreciated property. It will have a recognizable value, such as ten hours of excavation services.

Invited Application: After a non-profit organization submits a proposal/request to a foundation, and it goes through an initial review, the foundation may then invite the organization to submit a formal (more detailed) application in order to be considered for funding. This process will vary by foundation and may not be necessary for some requests.

Multi-year: Refers to a grant where a foundation agrees to provide funding for several consecutive years, often to support a program operated by a non-profit organization.

Operating Support: A contribution given to cover an organization’s day-to-day, on-going operating expenses, such as salaries, utilities, office supplies, etc.

Overhead Expenses: Expenses such as the fixed costs of running a business (rent and utilities) are considered overhead. Also considered overhead are fees charged to an operation by a parent organization or management firm where they take a percentage of revenue (or grant funds) generated by the non-profit.

Pledge: A promise to make future contributions to an organization. For example, some donors make multi-year pledges promising to grant a specific amount of money each year. Pledges are usually binding promises to pay.

Private Foundation: A non-governmental, non-profit organization with funds (usually from a single source, such as an individual, family or corporation) and programs managed by its own trustees or directors, established to maintain or aid social, educational, religious or other charitable activities serving the common welfare, primarily through grantmaking. U.S. private foundations are tax-exempt under Section 501(c)(3) of the Internal Revenue Code and are classified by the IRS as a private foundation as defined in the code.

Proactive: A foundation may choose to make proactive grants, which means the foundation has determined an area of focus or cause it wishes to support and will fund it in order to achieve a specific outcome or result.

Program Officer: A staff member of a foundation who may do some or all of the following: recommend policy, review grant requests, manage the budget, and process applications for the foundation's officers and directors.

Program Related Investment: A loan or other investment made by a private foundation to a profit-making or non-profit organization for a project related to the foundation’s stated purpose of interest. The foundation generally expects to receive its money back with limited, or below-market, interest, which then will provide additional funds for loans to other organizations.

Responsive: A foundation may choose to make responsive grants. These grants may also be called reactive, meaning the foundation is reacting to proposals/requests submitted by non-profits; these requests are generally unsolicited by the foundation.

Seed money: A grant or contribution used to start a new project or organization.

Site Visit: When a program officer or foundation staff member visits a grantee organization at its office location or area of operation and/or meeting with its staff, directors or recipients of its services. Generally conducted prior to approval of a grant as part of "due diligence" research.

Sponsorship: When an individual or organization has agreed to support an event through money or pledges.